By Jonathan Stempel

(Reuters) -Berkshire Hathaway, the conglomerate run by billionaire Warren Buffett, on Monday disclosed new investments in the homebuilders DR Horton, Lennar and NVR.

The investments were disclosed in a regulatory filing that detailed Berkshire’s U.S.-listed stock holdings, which comprise most of its $353.4 billion equity portfolio, as of June 30.

All were made during the second quarter, a down period for Berkshire’s homebuilding and remodeling businesses such as Clayton Homes, Benjamin Moore paint and Johns Manville insulation as rising interest and mortgage rates slowed demand.

But Berkshire said those effects have been partially offset by new construction activity resulting from low inventory of existing homes for sale, an environment that could benefit homebuilders.

Berkshire said that as of June 30, it owned about 5.97 million DR Horton shares worth $726.4 million, about 153,000 Lennar shares worth $17.2 million, and 11,112 NVR shares worth $70.6 million.

The filing does not say which investments are Buffett’s and which are from his portfolio managers Todd Combs and Ted Weschler.

Larger investments are usually Buffett’s, and investors often try to piggyback on Berkshire’s moves, reflecting Buffett’s reputation as an investor.

Shares of DR Horton rose 2.8% and Lennar rose 2% in after-hours trading. NVR’s stock price tops $6,000 and its shares therefore trade more thinly.

Berkshire also owns dozens of operating businesses including the Geico car insurer, BNSF railroad, several energy, utility and industrial companies, and consumer brands such as Dairy Queen, Duracell, Fruit of the Loom and See’s Candies.

Despite the new investments, Berkshire was a net seller of stocks in the quarter, buying $4.6 billion and selling $12.6 billion from its $353.4 billion equity portfolio.

The selling included 45% of Berkshire’s stake in General Motors, whose shares fell 1% after hours.

For all of 2023, Berkshire has sold $18.4 billion more stocks than it has bought. Its largest stock holding by far remained its $177.6 billion stake in Apple.

Among the other second-quarter changes disclosed on Monday, Berkshire added to its stake in Capital One, reduced its stakes in Celanese and Globe Life, and exited holdings in Marsh & McLennan, McKesson and Vitesse Energy.

(Reporting by Jonathan Stempel in New YorkAdditional reporting by Lewis Krauskopf; Editing by Marguerita Choy and Matthew Lewis)

By Jody Godoy

(Reuters) – (This Aug. 11 story has been corrected to say ‘National Center for Public Policy Research v. Schultz et al., No. 22-00267, U.S. District Court, Eastern District of Washington,’ not ‘Craig v. Target Corp. et al., No. 23-00599, U.S. District Court, Middle District Of Florida,’ in paragraph 16)

A U.S. judge on Friday dismissed as frivolous a conservative activist investor’s lawsuit against Starbucks’ board for the coffee chain’s diversity, equity and inclusion policies.

The National Center for Public Policy Research (NCPPR) sued in August 2022 over Starbucks’ setting hiring goals for Black and other people of color, awarding contracts to “diverse” suppliers and advertisers, and tying executive pay to diversity.

The nonprofit, which holds around $6,000 in Starbucks stock, said those policies require the company to make race-based decisions that violate federal and state civil rights laws.

Chief U.S. District Judge Stanley Bastian in Spokane, Washington, rejected the allegations at a hearing in the case on Friday, saying the lawsuit centered on public policy questions that are for lawmakers and corporations, not courts, to decide.

“If the plaintiff doesn’t want to be invested in ‘woke’ corporate America, perhaps it should seek other investment opportunities rather than wasting this court’s time,” he said.

Starbucks said it was pleased with the decision and said it remains committed to “creating a culture of warmth and belonging.”

Starbucks’ attorney Gregory Watts argued at the hearing that NCPPR has condemned the “evils” perpetrated by “woke” corporate America, and that the group has made demands of many other corporations, including JPMorgan Chase and American Airlines Group Inc.

“The use of such language shows what is motivating plaintiffs, and it is not the business interests of Starbucks,” he said.

The lawsuit is similar to those recently by conservative activist groups opposing corporate diversity and inclusion efforts in the wake of a June Supreme Court ruling.

The ruling declared unlawful the race-conscious student admissions policies used by Harvard University and the University of North Carolina.

On Friday, Daniel Morenoff of The American Civil Rights Project, who represents NCPPR, argued that Starbucks policies seeking to increase racial diversity among its suppliers, vendors, and employees were discriminatory and that NCPPR’s cause was in the corporate interest.

Bastian rejected that argument, saying the group’s complaint did not represent the interests of Starbucks shareholders and failed to follow required legal procedure.

NCPPR may not refile its complaint, and Starbucks may seek legal fees, he said.

NCPPR spokesperson Scott Shepard called the judge’s comments “surprising and disappointing.”

“We will continue to pursue relief from illegal discrimination on behalf of shareholders and employees,” he said.

The case is National Center for Public Policy Research v. Schultz et al., No. 22-00267, U.S. District Court, Eastern District of Washington.

(Reporting by Jody Godoy in New York and Tom Hals in Wilmington, Delaware; Editing by Chris Reese and Marguerita Choy)

By Niket Nishant and Manya Saini

(Reuters) -Digital payments giant PayPal Holdings on Monday named Alex Chriss, a top executive at tax-preparation software firm Intuit, its next CEO as it looks to grab a bigger share of the payments market for small businesses.

Chriss, who has a strong track record in dealmaking, will replace Dan Schulman next month. Schulman will remain on PayPal’s board until the next annual meeting of stockholders in May.

Shares of the company ended 2.8% higher at $63.27 on Monday. Meanwhile, in a late filing, activist investor Elliott disclosed it had dissolved its stake in PayPal.

It is a key moment for the digital payments giant that will be helmed by a new chief for the first time since it split from e-commerce firm eBay in 2015, with analysts noting his appointment could signal an increased focus on M&A.

“We believe (Chriss’s) experience sounds highly relevant to PayPal as it reemphasizes focus on small merchants and launches PayPal Complete Payments,” William Blair analysts wrote in a note.

PayPal Complete Payments is a payments processing solution for small and medium-sized businesses.

According to Wolfe Research, the biggest accomplishment of Chriss at Intuit was the company’s $12-billion acquisition and integration of Mailchimp in 2021.

He has been with Intuit for around two decades and is currently executive vice president and general manager of its Small Business and Self-Employed Group.

“We see this (appointment) as a key positive, given a main concern from investors about PayPal is the company’s lackluster record with acquiring and integrating assets in recent years,” Wolfe Research analyst Darrin Peller said.

NO “DRAMATIC” CHANGES

Weak margins at PayPal have brought cost-cutting measures to the forefront of conversations among investors, and analysts are also worried about the competition in the buy now, pay later (BNPL) space from technology goliath Apple.

To gain an edge over rivals, PayPal has been exploring several avenues lately. Last week, it launched a U.S. dollar stablecoin, becoming the first major financial technology firm to embrace digital currencies for payments and transfers.

Chriss’s appointment may have generated excitement about PayPal’s M&A ambitions, but the issue of underwhelming margin at the San Jose, California-based company is expected to be a dampener.

“We don’t expect dramatic changes after Chriss takes over. We believe it would be very difficult to veer from the company’s current focus on improving margins and returning capital to shareholders, given the involvement of activist investor Elliott Management,” Morningstar analyst Brett Horn said.

Elliott in August last year disclosed its stake in the company. While the companies did not spar publicly, analysts have said that PayPal’s focus on improving margins was likely a result of pressure from Elliott.

(Reporting by Niket Nishant in Bengaluru; Editing by Pooja Desai and Shinjini Ganguli)

By Pete Schroeder

WASHINGTON (Reuters) – The U.S. dollar hit its highest levels in more than a month on Monday amid worries over China’s economy, while Wall Street struggled for any clear picture ahead of fresh data on consumer appetite.

The dollar index, which tracks the greenback versus a basket of six currencies, was last up 0.28% at 103.133, after hitting its highest level since July 7.

The dollar surged on news that China’s new bank loans tumbled in July even as policymakers cut interest rates. Investors also feared that trouble at the nation’s largest private property developer, Country Garden, could have a chilling effect on home buyers and financial institutions.

Country Garden’s shares plunged 18% to a record low on Monday after its onshore bonds were suspended for the first time.

Meanwhile, two Chinese listed companies said over the weekend they had not received payment on maturing investment products from asset manager Zhongrong International Trust Co.

“A lot of traders are focusing again on China,” said Edward Moya, senior market analyst at OANDA. “I think there’s so much concern with just their growth outlook, with their current property crisis, and I think one of the biggest wealth managers not being able to make (their) debt obligations is a big red flag.”

The three major U.S. indexes were up slightly, as a 7% surge in chipmaker Nvidia helped push megacap growth stocks higher.

The Dow Jones Industrial Average rose 26.23 points, or 0.07%, to 35,307.63, the S&P 500 gained 25.67 points, or 0.58%, to 4,489.72 and the Nasdaq Composite added 143.48 points, or 1.05%, to 13,788.33.

The session began in the shadow of last week’s global equity sell-off, with the MSCI world equity index, which tracks shares in 45 nations, last down 0.12%.

Oil prices were down on Monday also on China worries, as concerns about the nation’s ability to bounce back to pre-pandemic levels outweighed gains previously posted on tighter supply.

Brent crude ended the day down 0.68% at $86.22 a barrel. U.S. crude was down 0.87% at $82.47 per barrel.

Safe havens in the U.S. also looked more appealing after voters in Argentina surprised markets by pushing a radical libertarian outsider candidate into first place, placing pressure on the country’s bonds.

In the aftermath, the country’s central bank planned to hike interest rates by 21 percentage points to 118% and devalued the nation’s currency until the nation’s formal October election.

The safe haven appetite drove up yields on benchmark 10-year U.S. Treasury bonds to a nine-month high. Benchmark 10-year yields hit 4.215%, the highest since Nov. 8, before falling back to 4.186%.

Gains for the dollar and U.S. Treasuries weighed on gold prices, which dipped to a more than one-month low on Monday. Spot gold prices were last down 0.36% at $1,906.20 an ounce.

Fresh economic data this week includes U.S. retail sales on Tuesday. Consumers are forecast to show a 0.4% pickup in spending, but it could swing higher thanks in part to Amazon’s Prime Day. U.S. retail giants are also due for quarterly reports this week.

A strong spending report could challenge the market’s benign outlook for U.S. rates, with futures implying a 70% chance the Federal Reserve is done hiking in its bid to tame inflation. The market also has more than 120 basis points of cuts priced in for next year starting from around March.

(Reporting by Pete Schroeder in Washington, Wayne Cole in Sydney and Alun John in London; Editing by Richard Chang and Matthew Lewis)

By Dietrich Knauth

NEW YORK (Reuters) – Crypto lender Celsius Network on Monday received a U.S. bankruptcy judge’s permission to seek creditor approval for its bankruptcy plan, advancing a proposal to exit Chapter 11 as a new entity owned by its creditors.

Judge Martin Glenn signed off on Celsius’s disclosure statement and solicitation materials at a U.S. Bankruptcy Court hearing in Manhattan, saying Celsius had given creditors sufficient information to vote on the proposed restructuring.

Some creditors oppose the plan, but the official committee appointed to represent junior creditors supports it and will recommend that Celsius customers vote in favor.

New Jersey-based Celsius filed for Chapter 11 protection in July 2022, one of several crypto lenders to go bankrupt following the rapid growth of the industry during the COVID-19 pandemic. Celsius had 600,000 customers who held about $4.4 billion in interest-bearing Celsius accounts when it filed for bankruptcy, according to court documents.

Celsius’s bankruptcy plan would return some crypto deposits to retail customers and hand control of remaining business lines – including bitcoin mining and staking – to the Fahrenheit Group, a consortium that includes blockchain-based venture capital firm Arrington Capital.

Celsius estimates that most of its customers, who had interest-bearing Earn accounts, will receive a 67% recovery, through return of liquid crypto assets like Bitcoin and Ether, equity shares in the new company, and proceeds of post-bankruptcy litigation against company founder Alex Mashinsky and others. Customers will generally receive a higher recovery on other, non-interest-bearing accounts.

Fahrenheit will buy a minority stake in the new business for $50 million and will publicly list the new company’s stock on Nasdaq. This will allow Celsius customers to sell equity shares that they will receive as part of their bankruptcy recovery, according to court documents.

The reorganized company will pursue litigation against Mashinsky, who already faces U.S. criminal charges and a New York civil lawsuit for allegedly misleading customers and artificially inflating the value of his company’s propriety crypto token. Mashinsky has pleaded not guilty.

Celsius creditors have a Sept. 20 deadline to submit votes on the proposal, and Celsius intends to seek final court approval of its restructuring plan on Oct. 2, according to court documents.

(Reporting by Dietrich Knauth, Editing by Alexia Garamfalvi and David Gregorio)

By Jonathan Stempel

(Reuters) – Kellogg and its Kashi unit have defeated appeals seeking to revive two proposed class actions accusing them of deceiving consumers about the protein content of their products.

In a 3-0 decision on Monday, the 9th U.S. Circuit Court of Appeals in San Francisco agreed with a lower court judge that federal law preempted the plaintiffs’ claims under California and Illinois consumer protection laws.

The plaintiffs objected to Kellogg’s alleged false and misleading labeling on more than 30 cereals, bars, granola products, shakes, waffles and meat substitutes sold under the Kashi, Bear Naked, MorningStar Farms, RX and Special K brands.

They said the labels were deceptive because they “broadly tout protein quantity,” with claims such as “11g Protein” and “PROTEIN 15g,” without disclosing that the amounts include “poor quality” protein that the human body cannot absorb.

Circuit Judge Morgan Christen said the text and structure of Food and Drug Administration regulations showed it could be misleading under federal law to promote protein quantity on labels, outside of the “nutritional facts” panel, that doesn’t take into account protein quality.

But she found no allegations that Kellogg crossed a line, and said the Battle Creek, Michigan-based company could not be held to higher standards under state laws.

Lawyers for the plaintiffs did not immediately respond to requests for comment. Kellogg and its lawyers did not immediately respond to similar requests.

The cases are Nacarino et al v Kashi Co, 9th U.S. Circuit Court of Appeals, No. 22-15377; and Brown et al v Kellogg Co in the same court, No. 22-15658.

(Reporting by Jonathan Stempel in New York; Editing by Conor Humphries)

By Luc Cohen

NEW YORK (Reuters) -Sam Bankman-Fried will prepare for his fraud trial from a Brooklyn jail where inmates ranging from convicted sex trafficker Ghislaine Maxwell to Honduras’ former president have complained of subpar conditions.

U.S. District Judge Lewis Kaplan in Manhattan ruled on Friday that Bankman-Fried, the founder of bankrupt cryptocurrency exchange FTX, must be jailed for tampering with witnesses while free on $250 million bond at his parents’ home in Palo Alto, California.

Bankman-Fried, who has pleaded not guilty to fraud charges over FTX’s collapse, will now be housed before his Oct. 2 trial in Brooklyn’s Metropolitan Detention Center, a far cry from the luxurious Bahamas resort where he lived until his December 2022 arrest and extradition to the United States.

In recent years, MDC has been plagued by persistent staffing shortages, power outages and maggots in inmates’ food. Earlier this year, a guard pleaded guilty to accepting bribes to smuggle in drugs. Public defenders have called conditions “inhumane.”

In the winter of 2019, an electrical fire cut off the jail’s lighting and heat for days as temperatures fell to near zero Fahrenheit (minus 18 Celsius).

Lawyers for Maxwell, who was convicted of recruiting and grooming teenage girls for abuse by the late financier and sex offender Jeffrey Epstein, said raw sewage seeped into her MDC cell. Her attorneys compared the “reprehensible and utterly inappropriate” conditions there to Hannibal Lecter’s incarceration in the 1991 movie “The Silence of the Lambs”, “despite the absence of the cage and plastic face guard.”

They also cited “hyper-surveillance” by overbearing guards, a bad diet and sleep deprivation.

Maxwell was sentenced last year to 20 years and is being held at a prison in Florida.

A spokesperson for the U.S. Bureau of Prisons, which runs MDC, said in a statement the agency makes “every effort to ensure the physical safety of individuals confined to our facilities through a controlled environment that is secure and humane.”

Founded in 1994, MDC currently hosts 1,608 inmates. It is now the jail housing detainees awaiting federal trials in New York City, after the Manhattan Correctional Center closed in 2021 for improvements. Epstein killed himself in his MCC cell while awaiting trial on sex trafficking charges.

Bankman-Fried’s lawyers had urged Kaplan not to jail the 31-year-old former billionaire, in part because a “staffing crisis” at MDC meant there would be too few guards to escort him to a room where he could access computers to review prosecutors’ evidence against him.

Kaplan said during the hearing that while MDC “is not on anybody’s list of five star facilities,” he was not sure whether housing Bankman-Fried at a minimum security jail in Putnam County, about 50 miles (80 km) north of New York City, as prosecutors had requested, was “doable.”

In a letter on Monday, Bankman-Fried’s lawyers asked Kaplan to order MDC to provide their client with daily prescription medications for depression and attention deficit hyperactive disorder. 

It is not Bankman-Fried’s first time behind bars. In the Bahamas, he was held for nearly a week at the Fox Hill Prison, which a 2021 U.S. State Department report said was plagued by rodents and a lack of toilets. Local authorities said in December conditions had improved.

Other high-profile inmates currently being held at MDC include Juan Orlando Hernandez, the former president of Honduras who has pleaded not guilty to drug trafficking charges, and Guo Wengui, an exiled Chinese businessman who has pleaded not guilty to fraud charges.

Hernandez’ lawyers have likened his confinement conditions to those of a “prisoner of war.” Guo’s lawyers in March called MDC “an extraordinarily dangerous environment,” citing a recent lockdown in response to an increase in contraband including weapons.

(Reporting by Luc Cohen in New York; Editing by Noeleen Walder, Daniel Wallis and Cynthia Osterman)